How can investors make bank in this chaotic climate?
The US markets seem determined to keep things interesting for investors, maintaining a huge level of volatility that first arose at the start of the pandemic, in March 2020. The MarketWatch volatility index has remained above 25 for over a year now – prior to 2020, it rarely spiked over 15 for long periods of times. This scares investors, it destroys well planned investment strategies, and it puts off newcomers to the markets. With all of that in mind, it’s perhaps time to look to the experts to establish how to generate wealth in these most tumultuous of times.
Independent financial management
Wall Street has routinely predicted a downturn for wealth managers and yet, according to Reuters, they have continued to defy expectations. The specific experience and liability taken on board by wealth management firms has associated them with a greater degree of risk. However, that’s not a uniform principle. As NYC wealth management specialists Target Rock highlights, wealth management companies have taken a more holistic approach to wealth creation in recent years. Rather than just establishing a baseline of risk and then investing on that basis, firms will look at retirement plans, trusts, family and learning, and risk mitigation, all in the whole. This means that turning to wealth management may actually help to shield against volatility – while still bringing in the experience needed to make big returns.
Resorting to trackers
Tracker funds are hardly seen as the most exciting nor experience-valuing form of investment but they retain a worthy place in the average investor’s portfolio. According to Investopedia, statistics show that tracker funds, and ETFs, remain a way to generate significant profits despite the inherently low margins. In a volatile time, resorting to ETFs that track key indexes – commodities, primary services, and utilities – can help to put money where those essential industries are operating. This, in turn, safeguards wealth while keeping returns ticking over, typically at a rate that will continue to beat inflation – even during times of significant rises.
Looking at blue chips
There are, of course, blue chip socks. As US News highlights, Johnson & Johnson, Apple, Walmart and Microsoft have continued to make gains – even as the tech giants among them have undergone painful transformation to match up to the modern digital age. What these companies don’t provide is insurance against short-term risk. New investors may not be able to stomach the short-term danger posed by these stocks; of course, these risks are only very short term, and on the long scale are low-risk. Even in its most recent dip, Apple has recovered to find new highs. For investors who should be taking the view of sailing out of the current financial storm, that’s a big pull factor.
Keeping a calm head, then, and deferring to time-honored stocks, or older, more experienced voices, is the key to getting the most out of the current stock market challenge. The chaos will end, and when it does, the calm investors will prevail.